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Subject: Bilateral Relations

1. Major World Events
2. India’s Interests in neighbourhood
3. Effects of our Policies

  • Indus Water Panel holds meeting

    After a gap of more than two and a half years, the Indian and Pakistani delegations began the 116th Meeting of the Permanent Indus Commission.

    Indus Waters Treaty, 1960

    • The Indus Waters Treaty is a water-distribution treaty between India and Pakistan, brokered by the World Bank signed in Karachi in 1960.
    • According to this agreement, control over the water flowing in three “eastern” rivers of India — the Beas, the Ravi and the Sutlej was given to India
    • The control over the water flowing in three “western” rivers of India — the Indus, the Chenab and the Jhelum was given to Pakistan
    • The treaty allowed India to use western rivers water for limited irrigation use and unrestricted use for power generation, domestic, industrial and non-consumptive uses such as navigation, floating of property, fish culture, etc. while laying down precise regulations for India to build projects
    • India has also been given the right to generate hydroelectricity through the run of the river (RoR) projects on the Western Rivers which, subject to specific criteria for design and operation is unrestricted.

    Based on equitable water-sharing

    • Back in time, partitioning the Indus rivers system was inevitable after the Partition of India in 1947.
    • The sharing formula devised after prolonged negotiations sliced the Indus system into two halves.
    • Equitable it may have seemed, but the fact remained that India conceded 80.52 per cent of the aggregate water flows in the Indus system to Pakistan.
    • It also gave Rs 83 crore in pounds sterling to Pakistan to help build replacement canals from the western rivers. Such generosity is unusual of an upper riparian.
    • India conceded its upper riparian position on the western rivers for the complete rights on the eastern rivers. Water was critical for India’s development plans.

    Significance of the treaty

    • It is a treaty that is often cited as an example of the possibilities of peaceful coexistence that exist despite the troubled relationship.
    • Well-wishers of the treaty often dub it “uninterrupted and uninterruptible”.
    • The World Bank, which, as the third party, played a pivotal role in crafting the IWT, continues to take particular pride that the treaty functions.

    Need for a rethink

    • The role of India, as a responsible upper riparian abiding by the provisions of the treaty, has been remarkable.
    • However, of late, India is under pressure to rethink the extent to which it can remain committed to the provisions, as its overall political relations with Pakistan becomes intractable.

  • Applying lessons from India-Bangladesh ties to relations with Pakistan

    There is a sharp contrast between India’s relations with its neighbours two neighbours: Pakistan and Bangladesh. The article suggest drawing on the lessons from Indo-Bangladesh relations to mend Indo-Pak relations.

    Indo-Bangladesh relations

    • Prime Minister of India will travel to Dhaka this week to commemorate Bangladesh’s Declaration of Independence from Pakistan 50 years ago.
    • From being one of the world’s poorest countries in 1972, Bangladesh is now racing to be in the world’s top 25 economies by the end of this decade.
    • It is also a time for deeper reflection — on the inability of the region to come to a closure on the two Partitions of the subcontinent, the first in 1947 and the second in 1971.
    • Delhi and Dhaka have started finding ways to overcome the tragedy of the Partition to chart a new course of bilateral and regional cooperation.
    • Prime Minister Sheikh Hasina has provided strong leadership in advancing ties with India over the last decade and more.
    • Recently the Indian government mobilised enough political support to get a boundary settlement agreement with Bangladesh approved by the Parliament.
    • India also backed an international tribunal’s award resolving the maritime territorial dispute with Bangladesh.
    • The steady improvement in bilateral relations over the last decade has reflected in growing trade volumes, expanding trans-border connectivity, mutual cooperation on terrorism, and widening regional cooperation.

    Applying lessons from Indo-Bangladesh relations to Indo-Pak relations

    • Positive changes in India’s relations with Pakistan have been elusive.
    • Hopes have been rekindled by the agreement late last month between the two military establishments to a ceasefire on the border and to address each other’s concerns.
    • Following are the lessons we can learn and apply productively to Indo-Pak relations

    1) Importance of political stability

    • First lesson is the importance of political stability and policy continuity that have helped Delhi and Dhaka deepen bilateral ties over the last decade.
    • In contrast, the political cycles in Delhi and Islamabad have rarely been in sync.
    • Pakistan’s mainstream civilian leaders have all supported engagement with India.
    • In fact, it is the military that is yet to make up its collective mind.

    2) Concerns for mutual security

    • Cooperation in countering terrorism built deep mutual trust between Dhaka and Delhi.
    • That trust helped deal with many complex issues facing the relationship.
    • In the case of Pakistan, its army has sought to use cross-border terrorism as a political lever to compel India to negotiate on Kashmir.
    • If sponsoring terror seemed a smart strategy in the past, it has now become the source of international political and economic pressure on Pakistan.

    3) Depoliticise national economic interests

    • Delhi and Dhaka have steadily moved forward on issues relating to trade, transit and connectivity by dealing with them on their own specific merits.
    • Pakistan, on the other hand, has made sensible bilateral commercial cooperation and regional economic integration hostages to the Kashmir question.
    • It is not clear if Pakistan is ready to separate the two and expand trade ties while talking to India on Kashmir.

    Consider the question “The steady improvement in bilateral relations with Bangladesh over the last decade can offer valuable lessons to be applied to India-Pakistan relations. In light of this, examine the factors that India and Pakistan need to focus on to achieve improvement in bilateral relations.”

    Conclusion

    Both India and Pakistan need to recognise the importance of pursuing the national well being through regional cooperation. That is exactly what Bangladesh has done in the last decade.

  • Myanmar Refugees Issue

    India has sealed all entry points along the border with the southeast Asian neighbour and is closely monitoring to prevent any Myanmar nationals from entering the country.

    Issue: Problem with refugees

    • At least 1,000 people from the adjoining Chin State of Myanmar are said to have crossed over to Mizoram, fearing a military crackdown.
    • The Mizoram government favours providing refuge to the Chins that are ethnically related to the majority Mizos in the State.
    • However, the Ministry of Home Affairs has made it clear that “India is not a signatory to the 1951 UN Convention relating to the Status of Refugees and the 1967 Protocol theron”.

    When did the refugees start arriving?

    • Mizoram began feeling the heat a month after the military coup when three police personnel crossed over to Lungkawlh village in Serchhip district.
    • The influx of Myanmar nationals was reported from Hnahthial, Champhai, Saitual and Serchhip districts.
    • Most of the refugees waded across the Tiau River that runs along much of Mizoram’s 510-km border with Myanmar.

    Try answering this:

    The cross-border movement of insurgents is only one of the several security challenges facing the policing of the border in North-East India. Examine the various challenges currently emanating across the India-Myanmar border. Also, discuss the steps to counter the challenges. (15 Marks)

    Is this the first time this has happened?

    • Extremism, counter-insurgency and sectarian violence have driven people out of Myanmar into India in the past as well.
    • More than 1,200 Buddhists and Christians from Myanmar’s Arakan State had taken refuge in Mizoram’s Lawngtlai district in 2017.
    • They fled their homes after the Myanmar Army clashed with the extremist Arakan Army.
    • The refugees stayed back for more than a year. Thousands of Chins are said to be living in Mizoram for more than 40 years now.

    How porous is the border?

    Unlike India’s border with Pakistan and Bangladesh, much of the border with Myanmar is without any fence.

    • The Assam Rifles personnel guard the border but a tough terrain comes in the way of maintaining airtight vigil.
    • There have been calls to fence the border. Fencing the border would also help in checking the movement of extremist groups to and from Myanmar.
    • Some are against the idea, insisting that a fence would make the “free movement” of border residents into each other’s country difficult.
    • The two countries had in 2018 agreed to streamline the movement of people within 16 km of the border on either side.

    Note: Myanmar has indefinitely stalled the agreement to streamline the free movement of people within 16 km along the border citing domestic issues.

    Mizoram welcomes the refugees

    • As a humanitarian gesture, the Mizoram government has issued a standard operating procedure (SOP) to Deputy Commissioners of border districts to facilitate the entry of refugees and migrants.
    • The SOP stated that all Myanmar nationals entering Mizoram in connection with the political developments in the country shall be properly identified.
    • The government said those facing a threat to their lives should be treated as refugees, given medical care, relief and rehabilitation and security.

    Where do the Centre and Mizoram stand now?

    • The SOP was revoked on March 6 after the Centre conveyed its displeasure to the State over the development.
    • The State governments have no powers to grant “refugee status to any foreigner”.

  • [pib] US India Artificial Intelligence (USIAI) Initiative

    The US India Artificial Intelligence (USIAI) Initiative was recently launched.

    USIAI Initiative

    • This initiative focuses on AI cooperation in critical areas that are priorities for both countries.
    • It has been launched by the Indo-U.S. Science and Technology Forum (IUSSTF).
    • The IUSSTF is a bilateral organisation funded by the Department of Science & Technology (DST), the GOI and the U.S. Department of States.
    • USIAI will serve as a platform to discuss opportunities, challenges, and barriers for bilateral AI R&D collaboration, enable AI innovation, help share ideas for developing an AI workforce etc.
    • AI R&D is being promoted and implemented in the country through a network of 25 technology hubs working as a triple helix set up under the National Mission on Interdisciplinary Cyber-Physical Systems (NM-ICPS).

    Back2Basics: Artificial intelligence (AI)

    • Artificial intelligence (AI) refers to the simulation of human intelligence in machines that are programmed to think like humans and mimic their actions.
    • The term may also be applied to any machine that exhibits traits associated with a human mind such as learning and problem-solving.
    • The ideal characteristic of artificial intelligence is its ability to rationalize and take actions that have the best chance of achieving a specific goal.
    • A subset of artificial intelligence is machine learning, which refers to the concept that computer programs can automatically learn from and adapt to new data without being assisted by humans.
    • Deep learning techniques enable this automatic learning through the absorption of huge amounts of unstructured data such as text, images, or video.

  • A robust economic relationship between India and U.S.

    The article outlines the potential for India-U.S. collaboration in certain ares of trade which will bring many gains.

    India-U.S. bilateral trade

    • In the five years to 2019, bilateral trade grew at a CAGR of 7.7% per year to $146 billion.
    • If we assume the same rate of growth, the $500 billion target will be achieved by 2036.
    • To ensure this, the CAGR would need to be set at 11.9%.
    • This is doable if the right policy actions are taken.

    Areas of collaboration

    1) Healthcare exchanges

    • A collaborative response to the pandemic would contribute to global containment of the virus.
    • Business partnerships are already taking place in the supply chain.
    • As India becomes the hub of global vaccine distribution, building confidence in the Indian IPR regime, reviving the U.S.-India Health Dialogue, and mutually recognising standards and approvals will help drive healthcare exchanges.

    2) Improving the macro trade architecture

    • The macro trade architecture can be strengthened with a broad trade agreement focusing on resolving the low-hanging fruit.
    • The U.S.-India Trade Policy Forum meetings can be revived along with a cross-sector track-2 group to look at convergence on issues such as market access.
    • There is potential for flexibility from both sides for restoring the Generalised System of Preferences.
    • The two countries should consider initiating discussions on a free trade agreement.

    3) Trade in services

    • Recent regulations in the U.S. have impacted labour mobility which can be addressed through immigration reforms for employment-based visa backlogs and smooth and timely processes.
    • The MoU on labour cooperation signed in 2011 could be updated in line with India’s recent labour regulatory changes.
    • This may also be a good time to reconsider a totalisation agreement pertaining to social security, given that both have already entered into such agreements with many of the same partner countries.

    4) Defence industry ties

    • Defence industry ties can be stepped up in coordination with industry.
    • A defence dialogue including the private sectors of both sides could help in co-production and co-development in the defence and aerospace sectors.

    5) Stepping up engagement of SMEs

    • Five, engagement of small and medium enterprises (SMEs) can be stepped up.
    • Smaller U.S. companies can find significant new opportunities for investments in India and sourcing from India.
    • A U.S.-India SME CEOs Forum can be set up to catalyse such partnerships.

    6) Clean energy and climate change

    • The U.S.-India Strategic Energy Partnership should be geared towards joint investments in industrial decarbonisation, carbon dioxide removal and green hydrogen.
    • The programmes of Partnership to Advance Clean Energy Research, Partnership to Advance Clean Energy Deployment and Promoting Energy Access through Clean Energy must be relaunched.

    7) Digital economy partnership

    • India has proved its ability in this space with new opportunities opening up in robotics, space, AI and electric vehicles.
    • It is also important to disseminate information on India’s IPR regime improvements and work towards taking India off the U.S. Trade Representative IPR priority watchlist.

    8) Other areas

    • Other opportunities in the bilateral economic relationship include education, innovation and R&D, and agricultural trade and technology.

    Conclusion

    A closer economic partnership would bring gains to both sides in terms of GDP, employment, and productivity, given the complementary natures of their economies.

  • A giant leap forward for the Quad

    The first-ever Quad summit is an important milestone in the geopolitics of the region. The article highlights its significance.

    Significance of the first Quad summit

    • The maiden Quadrilateral Security Dialogue summit of the leaders of Australia, India, Japan and the U.S. on March 12 was a defining moment in Asian geopolitics.
    • That it was a meeting at the highest political level, occasioned a productive dialogue, and concluded with a substantive joint statement is indicative of its immediate significance.
    • If it leads to tangible action and visible cooperation, it will impact the whole region.

    Brief background of the Quad

    • The Indian Ocean tsunami of 2004 triggered cooperation among the navies and governments of the Quad powers.
    • They sought to forge diplomatic cooperation on regional issues in 2006-08.
    • But gave up mainly because China objected to it and the hostility to China was not yet a potent enough glue.
    • This began to change in 2017 when Beijing’s behaviour turned hostile, climaxing in multiple challenges in 2020.
    • This time, U.S. President Joe Biden moved swiftly to host a virtual summit, drawing immediate response from the other three leaders.

    5 highlights of the summit

    • A more sophisticated approach is being invented, with enhanced emphasis by the U.S. on carrying its allies and strategic partners together.
    •  The summit’s outcome, therefore, merits close attention for at least five reasons.

    1) Compromise over vision of Indo-Pacific

    • Past debates over diverse, even differing, visions of the Indo-Pacific are over.
    • The joint statement struck a neat compromise:
    • To please the U.S. and Japan, it refers to a “free and open” Indo-Pacific, but in the very next sentence it offers an elaboration – “free, open, inclusive, healthy, anchored by democratic values, and unconstrained by coercion” – that amply satisfy India and Australia.

    2) Alignment of approach towards China

    • The summit leaders have secured an adequate alignment of their approaches towards China.
    • Senior officials gave sufficient hints on this score, reinforced by phrases such as “security challenges” and “the rules-based maritime order in the East and South China Seas” in the joint statement.
    • Instead of unidimensional antagonism, the Quad members have preferred a smart blend of competition, cooperation and confrontation.

    3) Quad’s commitment development and well being of the region

    • The Quad has placed a premium on winning the battle for the hearts and minds of people in the Indo-Pacific region.
    • This explains the special initiative to ensure equitable access to COVID-19 vaccines for every person in need in the region from the western Pacific to eastern Africa.

    4) Working groups

    • The establishment of three working groups on vaccine partnership; climate change; and critical and emerging technologies and their new standards, innovation and supply chains is a welcome step.
    • All this should get the four national establishments into serious policy coordination and action mode, creating new capacities.
    • The careful choice of themes reflects a deep understanding of the long-term challenge posed by China and has global implications.

    5) Quad working together in future

    • The March 12 summit will not be a one-off.
    • The leaders have agreed to meet in-person later this year, possibly at an international event within the region.
    • Foreign ministers will gather at least once a year; other relevant officials, more often.
    • Thus, will grow the habits of the Quad working together for a common vision and with agreed modalities for cooperation.

    How ASEAN and China will react

    • The summit has been watched closely by the ASEAN capitals. A few of them may express cautious welcome.
    • Beijing seems rattled but resigned to the Quad’s new momentum.
    • The Chinese see it in negative terms, targeting New Delhi in particular.

    Consider the question “With the first-ever summit, the Quad is moving towards a strong coalition. In light of this, examine the challenges India faces as it deepes its engagement in the grouping.” 

    Conclusion

    The summit and ‘The Spirit of the Quad’ – the inspired title of the joint statement – represented a giant leap forward. Now is the time to back political commitment with a strong mix of resolve, energy, stamina and the fresh ideas of stakeholders and experts outside of government to fulfil the promise of the Quad.

  • [pib] Mission Sagar-IV

    As part of Mission Sagar-IV, Indian Naval Ship Jalashwa has arrived at Port Anjouan, Comoros to deliver 1,000 Metric Tonnes of rice.

    Mission SAGAR, unlike other missions, can create confusion with the name and its purpose. It is not a military exercise. Make note of such special cases. UPSC can ask such questions as one-liner MCQs.

    Also note the location of the island country Comoros and its geostrategic significance.

    Mission Sagar

    • SAGAR is a term coined by PM Modi in 2015 during his Mauritius visit with a focus on the blue economy.
    • It is a maritime initiative that gives priority to the Indian Ocean region for ensuring peace, stability and prosperity of India in the Indian Ocean region.
    • The goal is to seek a climate of trust and transparency; respect for international maritime rules and norms by all countries; sensitivity to each other`s interests; peaceful resolution of maritime issues; and an increase in maritime cooperation.
    • It is in line with the principles of the Indian Ocean Rim Association.

    Earlier such missions

    • This is the second visit of an Indian Navy ship to the island country within a span of one year.
    • Earlier, as part of Mission Sagar-I, in May-June 2020, the Indian Navy had delivered essential medicines to the nation.
    • Mission Sagar-II was undertaken in May-June 2020, wherein India reached out to Maldives, Mauritius, Seychelles, Madagascar and Comoros, and provided food aid and medicines.
    • Sagar-III was undertaken in Sihanoukville Port, Cambodia.

  • The Quad’s importance to India’s strategic autonomy

    India is a member of both the Quad and the BRICS. Is not it the contradiction? The article answers this question and maps the transformation of India’s relation with the U.S. over the years.

    Is India’s participation in BRICS and Quad contradictory?

    • Global Times, the Chinese newspaper last week speculating on the implications of the historic Quad summit for the BRICS.
    • In calling the Quad a “negative asset” for the BRICS the Global Times was highlighting what it sees as a contradiction in India’s participation in both the forums.
    • The paper argues that India has worsened “India-China and India-Russia relations” and halted progress “in the development of BRICS and SCO”.
    • Global Times warns that if India continues to get closer to Washington, India “will eventually lose its strategic autonomy”.

    Understanding India’s strategic autonomy

    • “Strategic autonomy” is the framework that guided Delhi’s international relations since the Cold War.
    • In the early 1990s, strategic autonomy was about creating space for India against the overweening American power.
    • Why the space was needed? It was mainly because of the U.S. stance on two important aspects: Kashmir issue and nuclear program.
    • President Bill Clinton had questioned the legitimacy of Jammu and Kashmir’s accession to India and declared the US’s intent to resolve Delhi’s Kashmir dispute with Pakistan.
    • Washington insisted that rolling back India’s nuclear and missile programmes was a major objective of US foreign policy.
    • All that changed over the last three decades.

    8 elements of  transformation of India’s relations with the U.S and China

    • A rising China has emerged as the biggest challenge to India and the US is increasingly an important part of the answer.
    • A few elements stand out.
    • First, China has become more assertive on the contested boundary, therefore, the support from the US and its Asian allies has been valuable.
    • Second, on the Kashmir question, China raises the issue at the UNSC while the US is helping India to block China’s moves.
    • Third, on cross-border terrorism, the US puts pressure on Pakistan and China protects Rawalpindi.
    • Fourth, the US has facilitated India’s integration with the global nuclear order while Beijing blocks Delhi’s membership of the Nuclear Suppliers Group.
    • Fifth, the US backs India’s permanent membership of the UNSC, China does not.
    • Sixth, India now sees the trade with China hollowing out India’s manufacturing capability.
    • Its objective on diversifying its economy away from China is shared by the US and the Quad partners.
    • Seventh, India opposes China’s Belt and Road Initiative as a project that undermines India’s territorial sovereignty and regional primacy.
    • India is working with Quad partners to offer alternatives to the BRI.
    • Finally, India sees China’s rising military profile in the subcontinent and the Indian Ocean as a problem and is working with Washington to redress the unfolding imbalance in India’s neighbourhood.

    India’s approach to BRICS and SCO

    • The BRICS was part of India’s strategy in the unipolar moment that dawned at the end of the Cold War.
    • India’s current enthusiasm for the Quad is about limiting the dangers of a unipolar Asia dominated by China.
    • But India will continue to attach some value — diplomatic if not strategic — to a forum like the BRICS.
    • After all, the BRICS forum provides a useful channel of communication between Delhi and Beijing at a very difficult moment in the evolution of their bilateral relations.
    • The BRICS is also about India’s enduring partnerships with Russia, Brazil, and South Africa.
    • India also values its ties with the Central Asian states in the SCO.
    • The BRICS could certainly become a productive forum someday — when Delhi and Beijing mitigate their multiple contentions.

    Consider the question “A rising China has emerged as the biggest challenge to India and the US is increasingly an important part of the answer. Examine the elements that support this underlying transformation of India’s relationship with the two countries.”

    Conclusion

    No amount of words in a BRICS declaration can hide the sharpening contradictions between India and China today. The absence of joint statements did not mask the growing strategic congruence among the Quad nations in recent years.

  • Explained: The Cairn Tax Dispute

    In December 2020, a three-member tribunal at the Permanent Court of Arbitration in the Netherlands ruled against India in its long-running tax dispute with the U.K.-based oil and gas company Cairn Energy.

    PCA Ruling against India

    • The tribunal ordered India to pay about $1.4 billion to the company.
    • Following this, Cairn Energy has successfully moved courts in five countries, including the US and the UK to recognise its claim as per the arbitration award.
    • The Netherlands, France, and Canada are the other three countries.
    • Such recognition by courts opens the door for Cairn Energy to seize assets of the Indian government in these jurisdictions by way of enforcing its claim, in case the latter doesn’t pay its dues.

    What is the dispute about?

    • The dispute started in early 2014 when Indian tax authorities started questioning Cairn Energy requesting information on the group’s reorganization in the financial year 2006-07.

    Issue over the tax due

    • This escalated, and by 2015, the authorities had sent the company a draft assessment order, assessing in the process that there was a principal tax amount of $1.6 billion that was due.
    • The year in reference, 2006-07, was one in which big corporate changes and developments took place in Cairn Energy.

    Basis of the tax demand: Sale of Shares

    • It was the year in which it not only undertook a corporate reorganization but also floated an Indian subsidiary, Cairn India, which in early 2007 got listed on the Indian Stock Market.
    • Through the corporate reorganization process, Cairn Energy had transferred all of its India assets, which were until then held by nine subsidiaries in various countries, to the newly-formed Cairn India.
    • But the tax authorities claimed that in the process of this reorganization, Cairn Energy had made capital gains worth ₹24,500 crores.
    • This, the department asserted, was the basis of the tax demand.

    Is this case similar to Vodafone’s battle with the government?

    • The Vodafone case in 2007 was triggered by Hong Kong’s Hutchinson Telecommunications’ sale of its stake in India’s Hutchinson Essar to Vodafone based out of the Netherlands.
    • The Hong Kong firm made a capital gain on this, which the Indian tax authorities deemed fit to tax.
    • They held that Vodafone should have withheld the tax, and therefore imposed liability on it.
    • The Supreme Court quashed the taxman’s demand that the sale of shares, in this case, would amount to transfer of a capital asset within the meaning of Section 2(14) of the Indian Income Tax Act”.

    What governs the Sale of Shares?

    • In the Union Budget of 2012, the Income Tax Act, 1961 was amended to make sure that even if a transfer of shares takes place outside India, such a transfer can be taxed.
    • This was done when the value of those shares is based on assets in India. And this was applied retrospectively.

    Cairn won over Retrospection

    • The action against Cairn Energy was based on this move.
    • India lost its arbitration case against Vodafone as well, with the government being asked to fork out around ₹80 crores.

    What happened after the tax claims in the Cairn Energy dispute?

    • After receiving a draft assessment order from the tax authorities, Cairn UK Holdings Ltd. appealed before the Income Tax Appellate Tribunal.
    • The tribunal, while providing the company relief from back-dated interest demands, however, upheld the main tax demand.
    • The company had initiated proceedings of arbitration under the U.K.-India bilateral investment treaty.
    • But during this time, the government sold Cairn’s almost 5% holding and seized dividends totalling ₹1,140 crore due to it from those shareholdings and set off a ₹1,590-crore tax refund against the demand.

    What was the main argument of Cairn Energy during the arbitration?

    • The claimants, Cairn Energy and Cairn UK Holdings argued that till the amendment was made to tax retrospectively in 2012, there was no tax on indirect transfers.
    • Indirect transfers here meant transfer by a non-resident of shares in non-Indian companies which indirectly held assets in India.
    • The application of the 2012 amendments, they alleged, constituted “manifest breaches” of the U.K.-India bilateral investment treaty.

    What was India’s defence during the arbitration?

    • India’s counter to the main charge of Cairn Energy was that its 2006 transactions were taxable irrespective of the 2012 amendments.
    • It argued that “Indian law has long permitted taxation where a transaction has a strong economic nexus with India”.
    • It said even if it is retrospective, it is “valid and binding applying the longstanding constitutional, legislative and legal framework in which the claimants have invested”.

    What did the arbitration tribunal rule?

    • The tribunal said the tax demand violated the U.K.-India bilateral investment treaty.
    • The tribunal said India “failed to accord Cairn Energy’s investments fair and equitable treatment” under the bilateral protection pact it had with the United Kingdom.
    • It also ordered India to compensate Cairn Energy and its subsidiary for “the total harm suffered” as a result of the breaches of the treaty.

    India’s way ahead

    • It has been reported in the media that India will appeal against the tribunal’s decision.
    • If enforcement proceedings are initiated, India is confident of addressing them and will strongly defend its interests.

    Back2Basics: Permanent Court of Arbitration (PCA)

    • It is an intergovernmental organization located in The Hague, Netherlands.
    • It is not a court in the traditional sense but provides services of arbitral tribunal to resolve disputes that arise out of international agreements between member states, international organizations or private parties.
    • The cases span a range of legal issues involving territorial and maritime boundaries, sovereignty, human rights, international investment, and international and regional trade.
    • The PCA is constituted through two separate multilateral conventions with a combined membership of 122 states.
    • The organization is not a United Nations agency, but the PCA is an official United Nations Observer.

  • Biden’s Afghanistan Peace Plan

    The Joe Biden administration has proposed a new peace plan to the Afghan government and the Taliban, seeking to bring violence to a halt and form an interim government.

    What is Biden’s proposal?

    • The US has asked the Afghan President to show “urgent leadership in the coming weeks”.

    The proposal included many elements.

    • It has proposed an UN-led conference of representatives of Russia, China, Pakistan, Iran, India and the US to discuss a unified approach to support peace in Afghanistan.
    • It urges both sides including the Taliban to reach a consensus on Afghanistan’s future constitutional and governing arrangements.
    • It asks to find a road map to a new “inclusive government”; and agree on the terms of a “permanent and comprehensive ceasefire”.

    Why the US is making this peace push?

    • The US has pointed out that accelerating the peace process is the best way to advance the shared interests of the US and the Afghan government.
    • According to the agreement the U.S. signed with the Taliban in February 2020, American troops – currently some 2,500 troops are in Afghanistan – are set to vacate by May 1.
    • The Taliban and the Afghan government started peace talks in Doha in September last year but reached no breakthrough.
    • The Biden administration is concerned about the slow pace of the talks.

    Why is the US delaying troops withdrawal?

    • The US assessment is that if American troops are pulled out of Afghanistan, the Taliban would make quick gains.
    • So, the Biden administration’s believes that the Taliban are on the ascent.
    • It hopes that the best way to prevent a complete Taliban takeover is a regional peace process and an interim unity government.
    • The Taliban are yet to respond to America’s proposal.

    What is the Afghan government’s stand?

    • The Ghani administration has consistently been critical of the US’s direct outreach to the Taliban.
    • The Trump administration held direct talks with the Taliban, excluding the government.
    • Later, Washington put pressure on Kabul to release Taliban prisoners as part of an agreement it reached with the insurgents.
    • Even when the Doha talks between the Taliban and the Afghan government were underway, Mr Ghani made it clear that he, as elected President, is the only legitimate representative of the Afghan people.
    • He resisted making concessions to the Taliban.

    India’s position in the process

    • Since the Afghan peace process began two years ago, India’s role in it has been peripheral at best.
    • Our EAM has iterated India’s long-held support for an “Afghan-led, Afghan-owned, and Afghan-controlled” peace process.

    What lies ahead

    • While the Afghan government’s opposition to sharing power with the Taliban is well known, it is not clear whether Mr Ghani could continue to resist American pressure.
    • And if the Biden administration decides to stick to the Taliban deal and withdraw troops by May, Mr Ghani would be in a tougher spot.
    • The people of Afghanistan do not have any good options. If Ghani rejects the American offer, the war will continue forever.
    • The Taliban have already taken over much of the country’s hinterlands and are breathing down the neck of its cities.
    • Either way, the Taliban are set to make gains.